The Supreme Court found that if the government were correct that the Tucker Act applies to this refund suit, jurisdiction over this case was proper only in the U.S. Court of Federal Claims. Also, because the Sixth Circuit must have the first opportunity to consider a new contention by the government with respect to jurisdiction in this case, the Supreme Court granted the petition for certiorari, vacated the judgment of the Sixth Circuit, and remanded the case for further proceedings.
Read the Court’s opinion [PDF 56 KB]
For a summary of the facts in this case, refer to the December 2012 edition TaxNewsFlash-United States: Sixth Circuit - Overpayment interest accrued when cash bond deposits were converted into advance payments
- The IRS asserted that the taxpayer had underpaid its taxes from 1983 until 1989.
- The taxpayer remitted a series of deposits to the IRS totaling $875 million, and these deposits stopped the ac¬crual of interest.
- Later, the taxpayer requested that the IRS treat the deposits as advance payments of the addi¬tional tax owed by the taxpayer.
- Eventually it was deter¬mined that the taxpayer had overpaid its taxes for the years at issue. The taxpayer was entitled to a tax refund plus interest.
- The parties disagreed when the interest began to run. The taxpayer asserted that “the date of overpayment” was the date that it first remitted the deposits to the IRS. The government countered that the date of over-payment was the date that the taxpayer requested that the IRS treat the remittances as payments of tax. The difference was approximately $445 million.
The taxpayer filed a refund action in federal district court, asserting jurisdiction under 28 U.S.C. section 1346(a)(1). The government did not contest the court’s jurisdiction, and granted the government’s motion for judgment on the pleadings.
The Sixth Circuit affirmed, concluding that section 6611 is a waiver of sovereign immunity that must be construed strictly in favor of the government. The taxpayer filed for certiorari, arguing that the Sixth Circuit was wrong to give section 6611 a strict construction, and that it was 28 U.S.C. section 1346—not section 6611—that waives the government’s immunity and that section 6611(b) was a “substantive provision” that is not to be construed strictly.
In response, the government contended for the first time that section 1346(a)(1) does not apply at all to this suit and that the only basis for jurisdiction, and “the only general waiver of sovereign immunity” that encompassed the taxpayer’s claim was the Tucker Act, 28 U.S.C. section 491(a).
The Supreme Court today found that if the government were correct that the Tucker Act applies to this suit, jurisdiction over this case was proper only in the U.S. Court of Federal Claims. Finding that the Sixth Circuit was to have the first opportunity to consider the government’s new contention with respect to jurisdiction in this case, the Court granted the petition for certiorari, vacated the judgment of the Sixth Circuit, and remanded the case for further proceedings.